Is BlackBerry (BBRY) Planning to Go Private?

Shares of BlackBerry (BBRY), formerly known as Research in Motion, warmed up last week after CEO Thorstein Heins stated that the company's board is considering taking the company private. BlackBerry has lost 19% of its market value this year, and dropped 93% over the past five years. Daily Chart

The arrival of Apple's (AAPL) iPhone in 2007, followed by an onslaught of Google (GOOG) Android handsets, struck a mortal blow to the company, which has lost market share ever since.
Even Nokia (NOK), which plunged with BlackBerry over most of the past five years, managed to bounce back under the leadership of former Microsoft (MSFT) executive Stephen Elop. Whereas Nokia was able to capitalize on the niche appeal of Windows Phone to stabilize its smartphone growth, BlackBerry continued to plummet, believing that the new iteration of its operating system, BB10, would save it. However, low demand for the touch-based Z10 and QWERTY keyboard Z10 sealed its fate, and the ailing smartphone maker tumbled to fourth place, behind Windows Phone. No deal is imminent yet, and BlackBerry has not initiated any sort of sale process. Analysts believe that even if Blackberry put itself on sale, it would be tough to find a buyer as long as the company is reporting quarterly losses and losing subscribers -- not an appealing package for private equity firms or larger companies. In addition, the Canadian government could block a major foreign takeover of a company as large as BlackBerry for competitive and national security reasons. Ottawa has stated that it hopes that the company will remain a Canadian one, which could nix any chances of a major takeover by an American firm. This sudden willingness to explore the option of going private, since Heins had stated last month that the company was on the right track to recovery, and merely needed more time to fix its problems. Heins also stated that the company as gearing up to unveil additional BB10 devices over the next eight months. Heins was also exploring the possibility of licensing its BB10 software out to hardware vendors and exploring other partnerships. However, it's tough to imagine hardware vendors partnering with BlackBerry, considering that they can license Google Android for free. If BlackBerry decides to go private, private equity firm Silver Lake Partners, which is currently fighting to take Dell private, could be interested. BlackBerry disclosed that it recently had discussions with Silver Lake regarding a potential partnership in enterprise computing. With the continuing strength of Apple and Google in the smartphone market, and a third place slot firmly occupied by Microsoft, BlackBerry's time could be running out quickly. Investors are unlikely to stick with the stock much longer if it continues reporting across the board declines, so taking the company out of the public eye to restructure itself privately might be a very attractive option. Other News About BBRY BlackBerry Cements Fourth Place in Smartphone Race BlackBerry falls to fourth place. BlackBerry US Subscriber Base Dips in Q2 BlackBerry bleeds more subscribers. Other Stocks in the News Should Companies Use Acquisitions and Financial Engineering to Reduce Corporate Taxes? How are these companies getting out of paying taxes? ACloserLookattheBattleOverCancerTreatments A look at the mergers and acquisitions over oncology. Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Aug 16, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

Copyrighted 2020. Content published with author's permission.

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